Monday’s Stock Market Report featuring WPP, Balfour Beatty, Fastjet and Gemfields

The Markets

The UK government has continued to sell down its holding in Lloyds Banking Group, off loading another 500 million pounds worth of shares, to take its stake to 22.98%. While the price received was not revealed the government said that all shares sold so far, under the guidance of Morgan Stanley, have been above the average 73.6p per share that was paid for them. UK Financial Investments, the subsidiary which owns the Lloyds stake, has now reduced its holding from a peak of 40% and has sold shares worth 8.5 billion pounds to date. Chancellor George Osborne commented, “The proceeds will be used to reduce the national debt.”

Two of Lloyds’ peers had a difficult day however. HSBC saw Argentina’s tax authorities demand that the bank repatriate $3.5 billion worth of funds which it believes HSBC helped its clients move offshore. Ricardo Echegaray, head of the Federal Administration of Public Revenue, alleges that that, “HSBC built a platform to help clients evade tax,”. The bank hit back by saying that, “it has “been cooperating fully with Argentine regulators…” Elsewhere, HSBC CEO Stuart Gulliver was facing MP’s on the Public Accounts Committee over his personal financial arrangements, and admitted that they had led his company to suffer reputational damage. Gulliver said that said his arrangements, including a Panamanian shell company, were not set up for tax avoidance.

Over at Barclays, The Local Authority Pension Fund Forum (LAPFF), which represents pension funds with combined assets of 160 billion pounds, called for the resignation of Sir John Sutherland, Chairman of the bank’s pay review committee. LAPFF Chairman Kieran Quinn commented, “It is inexplicable how Barclays can have gone back on its promise to the 2014 AGM that Sir John would step down. Having messed up remuneration for 2013 Sir John has in fact stayed on as chair and presided over another year of still unacceptably high pay for 2014, and is still in place in March 2015.”

At the London close the Dow Jones had risen by 113.54 points to 17,970.32 and the Nasdaq 100 was up by 0.19 points at 4,399.42.

In London the FTSE 100 closed down by 35.33 points at 6,876.47 and the FTSE 250 fell by 105.14 to 17,167.07. The FTSE All-Share slipped by 17.67 points to 3,711.28 but the FTSE AIM Index closed down by 2.56 points at 715.55.

Broker Notes

Westhouse updated on broadcaster ITV (ITV) raising its target price to 267p and its stance to “add” from “neutral”. The broker said that the firm’s recent results for 2014 detailed an “impressive showing” and an upbeat outlook. As such, earnings and dividend forecasts have been materially increased, with Westhouse seeing further potential earnings growth should acquisitions be made. The broker also likes the firm due to, “its unrivalled ability to deliver a large mass market audience, the quality and consistency of its management team and strategy and its cash-generative characteristics.” ITV shares inched up by 0.7p to 247.2p.

Beaufort Securities rates spoken word audio platform provider Audioboom (BOOM) as a “speculative buy” after last week’s agreement with in-vehicle content provider Aupeo, which is owned by Panasonic. Under the deal Audioboom will be a global provider and delivery platform of audio content to Aupeo and will create and deliver UK, US, Australian and European news, sport, comedy and entertainment audio content directly into Aupeo’s Personal Radio in-car infotainment platform. Beaufort reckons that, “the collaboration further enhances Audioboom’s reputation as a global brand, and seeks to position Audioboom as a leader in spoken-word audio content within the automotive market.” Audioboom shares slipped by 0.125p to 8.625p. For more analysis of the company read the March edition of Spreadbet Magazine, out now.

Blue Chips

WPP (WPP) reported on another record year, with headline pre-tax profits up by 3.7% at 1.51 billion pounds in 2014. The advertising giant delivered the performance despite currency movements having a 6.7% negative effect on revenues. WPP increased the dividend by 11.7% to 38.2p per share and added that it has seen a good start to 2015, with like-for-like revenues in January up by 6.7% and net sales up by 3.9%. Broker Westhouse has a 1,577p target on the shares, which rose by 18p to 1,559p.

There has been “trouble at t’mine” for Antofagasta (ANTO). the firm confirming that action by a group of protesters has forced blockades on the access road to its flagship Los Pelambres mine in Chile. Protests have continued and Antofagasta estimates that copper production has been reduced by an estimated 5,000 tonnes to date due to the protestors’ actions. Normal access to the mine has not been fully restored, with negotiations stalled, but Government authorities are making efforts to resume talks as soon as possible. Shares in the copper miner finished the day up by 4.5p at 752.5p.

Mid Caps

Balfour Beatty (BBY) has been appointed as the civil contractor for the ten year Thames Estuary Asset Management Programme on behalf of the Environment Agency. The deal is expected to be worth up to 250 million pounds to the infrastructure group. This the largest single flood risk asset management programme ever awarded in the UK, designed to manage and deliver capital investment works to the Thames tidal flood defences along the length of the Thames Estuary. Shares in Balfour Beatty fell by 4.2p to 239.2p.

Results from European industrial property investor Hansteen Holdings (HSTN) showed statutory pre-tax profits up by 101% to 131.2 million pounds in 2014, with management describing the year as “outstanding”. There was a property valuation increase across the total portfolio of 9.2% in the year, with 267.7 million pounds of properties acquired at an average yield of 9.8%. Hansteen upped the full year dividend by 4.2% to 5p per share and will also make a special payment of 3p per share. Hansteen Holdings shares fell by 2.5p to 114.1p.

Small Caps

Africa focussed budget airline Fastjet (FJET) saw its Tanzanian operations grow passenger numbers by 50% to 52,801 in February this year. While load factors fell by 6 percentage points to 70% the firm noted that it paid 13% less per gallon for fuel in February compared to January as it benefitted from the falling oil price. The shares were flat at 1.25p.

Shares in Transense Technologies (TRT) plunged by 0.625p to 1.25p after the sensor systems business reported a loss of 1.72 million pounds for the six months to December 2014. Sales for the period were said to be disappointing, down by 58% at 0.93 million pounds, driven by a fall in capital expenditure in the mining industry. With the losses pushing the cash position down to 1.53 million pounds at the period end Transense flagged that it was exploring funding options. Separately, the company announced that subsidiary Translogik has won a contract through its Australian distributor to supply 23 iTrack mining tyre monitoring systems for large haul trucks to the Ravensworth mine, owned by Glencore.

UK Oil & Gas (UKOG) has increased its stake in the Horse Hill development near Gatwick Airport from 20% to 28%. The further share was bought from Angus Energy Limited for 580,000 pounds. UKOG also has a 1.32% indirect interest in Horse Hill via its 6% interest in Angus Energy. Investors reacted by sending the shares up by 0.06p to 0.625p.

Education management software business Tribal Group (TRB) has bought Callista Software Services, a provider of student management systems to the Australian university market. Callista, based in Geelong and Melbourne, provides its software to 25% of Australian universities and made operating profits of A$1.6 million in 2014. Tribal is paying a total of A$3.6 million for the business, payable in cash in equal installments over a three year period. The firm added that the deal is expected to be earnings accretive in its first full year. Tribal group shares gained 3.75p, closing at 187.75p.

SyQic (SYQ) the provider of live TV and on-demand video content, will expand its new Korean content service, cool2vu, into Europe, South America and Central America. The firm has expanded its contract with global TV streaming site Viki, under which it has a two year agreement to make its TV shows and movies available to SyQic’s customers via the cool2vu platform. According to Korea’s Creative Content Agency the total value of Korea’s cultural exports doubled to more than $5 billion between 2008 and 2012. SyQic shares increased by 2.5p to 47p.

Shares in Tengri Resources (TEN) surged by 0.375p to 2.75p after the gold-copper explorer revealed assay results from the Taldy Bulak gold-copper deposit in the Talas Valley, Kyrgyz Republic. Highlights included 1.17 grammes per tonne of gold and 0.25% copper and higher grade sub intervals which showed 2 g/t of gold and 0.45% copper. The company said that the results, “…evidence the strength and continuity of the mineralisation of the deposit…”. A Feasibility Study on the project is underway.

Results from sparkler miner Gemfields (GEM) showed net profits soaring from $1.4 million to $23.2 million in the six months to December. This came on the back of a 57% rise in revenues, driven by a 16% increase in emerald and beryl productions and a 24% rise in ruby and corundum production. A ruby auction held in December included the exceptional 40.23 carat “Rhino Ruby” and achieved the highest revenues ever recorded for a Gemfields auction of $43.3 million. Gemfields added that it expects a steady increase in demand, and the associated positive impact on achievable prices, to continue for the foreseeable future. Broker Finncap has a 60p target on the shares, which slipped by 0.25p to 50.25p.